Getting to Know Mutual Fund Basics
Mutual Funds have gained immense popularity among small investors over the years. They are touted as being less risky than investing in stocks as a mutual fund manager makes the investment choices. The investor just has to choose between various types of mutual funds being offered.
Here's an introduction to mutual fund basics for small investors.
What are Mutual Funds?
A Mutual fund is an investment company which combines the money received from several of its investors and then reinvests the money in a diverse asset portfolio such as stocks of other companies, bonds etc. The investors in a mutual fund are in effect its shareholders. A mutual fund is open-ended in that it can adjust the number of shares in the fund.
Investors in a mutual fund can choose among the various types of mutual funds offered. The mutual fund manager makes the appropriate investment decisions on behalf of the investors. The income resulting from the investments by the mutual fund is distributed among its shareholders according to the number of units held by the fund shareholder. Enter the exciting dynamic field of mutual funds and investment. An online finance degree will equip you with the skills necessary to kickstart your investment advisor career.
What are the Benefits of Mutual Funds?
Mutual Funds are aggressively marketed towards small investors and claim a number of advantages over direct investments in the stock market by investors.
Let us take a look at some of the benefits of mutual funds: -
•Professional investment managers also known as mutual fund managers look after the stock portfolio of a Mutual Fund. Unseasoned investors or those with less time can benefit from the expertise of the mutual fund manager.
•Investments in mutual funds are said to be less risky than direct investment in markets by investors, as investment decisions during market fluctuations are made for the investors by the fund managers.
•A mutual fund tries hard to maintain certain level of returns for its share holders. The mutual fund NAV (Net Asset Value) is a key index of a mutual fund. Mutual fund managers endeavour to maintain optimal NAV levels during good times and bad.
•Shareholders or mutual fund investors are offered a diverse range of investments in the mutual fund, thereby reducing risk while maintaining optimal returns.
•Mutual fund shareholders can invest even small amounts and get a share in a valuable stock portfolio. Monthly payment programmes are also offered by many mutual funds.
Mutual Fund NAV - Net Asset Value
The Mutual Fund NAV or Net Asset Value indicates the market value of one unit of the mutual fund, or price per share.
The per unit mutual fund NAV is calculated by adding the market value of all assets in its portolio and dividing the total by the number of shares in the fund. The NAV is calculated at the end of day after stock markets close.
The investor can buy or sell units of a mutual fund based on the mutual fund NAV.
For example the SBI Mutual Fund NAV for its Emerging Businesses Fund on 13 July 2010 was listed as Rs.16.87. This means that a unit in this fund can be bought for Rs.16.87 rupees.
Investors can check their mutual fund NAV in the fund website, through newspapers or through timely statements indicating the current mutual fund NAV and value of their shares.
Types of Mutual Funds
There are numerous types of mutual funds differentiated according to various criteria. The various types of funds can also be further qualified as open-ended and closed end funds. Open-ended funds can adjust the number of shares or units in them, closed end funds cannot. Closed end mutual funds have only a fixed amount of shares.
Every mutual fund type has a specific investment objective. The selection of stocks in the mutual fund stock portfolio is done according to the investment objective.
Some major types of mutual funds are: -
•Growth fund - Growth fund has capital appreciation as their mutual fund objective. It is more volatile than other types of mutual funds.
•Equity fund - This type of mutual fund focuses on dividends and regular growth. The emphasis on income makes it of lower risk than growth
•Sectoral fund - As the name implies, a sectoral fund concentrates on specific sectors such auto sector, power sector etc.
•Balanced funds - This type of fund caters to the need of investors for low risk, steady income and moderate capital appreciation.
The types of funds available are numerous. Other mutual fund types include bond funds, large-cap funds, index funds etc.
Some examples of mutual funds
Major mutual funds include Franklin Templeton funds in the US which offers more than 110 mutual funds (www.franklintempleton.com) , SBI Mutual Funds (www.sbimf.com) and Sundaram Paribas Mutual Funds (www.SundaramBNPParibas.in) in India.
For Stock Market & commodity Market Advise Or Tips Visit www.marketprophecy.in
Mutual Funds have gained immense popularity among small investors over the years. They are touted as being less risky than investing in stocks as a mutual fund manager makes the investment choices. The investor just has to choose between various types of mutual funds being offered.
Here's an introduction to mutual fund basics for small investors.
What are Mutual Funds?
A Mutual fund is an investment company which combines the money received from several of its investors and then reinvests the money in a diverse asset portfolio such as stocks of other companies, bonds etc. The investors in a mutual fund are in effect its shareholders. A mutual fund is open-ended in that it can adjust the number of shares in the fund.
Investors in a mutual fund can choose among the various types of mutual funds offered. The mutual fund manager makes the appropriate investment decisions on behalf of the investors. The income resulting from the investments by the mutual fund is distributed among its shareholders according to the number of units held by the fund shareholder. Enter the exciting dynamic field of mutual funds and investment. An online finance degree will equip you with the skills necessary to kickstart your investment advisor career.
What are the Benefits of Mutual Funds?
Mutual Funds are aggressively marketed towards small investors and claim a number of advantages over direct investments in the stock market by investors.
Let us take a look at some of the benefits of mutual funds: -
•Professional investment managers also known as mutual fund managers look after the stock portfolio of a Mutual Fund. Unseasoned investors or those with less time can benefit from the expertise of the mutual fund manager.
•Investments in mutual funds are said to be less risky than direct investment in markets by investors, as investment decisions during market fluctuations are made for the investors by the fund managers.
•A mutual fund tries hard to maintain certain level of returns for its share holders. The mutual fund NAV (Net Asset Value) is a key index of a mutual fund. Mutual fund managers endeavour to maintain optimal NAV levels during good times and bad.
•Shareholders or mutual fund investors are offered a diverse range of investments in the mutual fund, thereby reducing risk while maintaining optimal returns.
•Mutual fund shareholders can invest even small amounts and get a share in a valuable stock portfolio. Monthly payment programmes are also offered by many mutual funds.
Mutual Fund NAV - Net Asset Value
The Mutual Fund NAV or Net Asset Value indicates the market value of one unit of the mutual fund, or price per share.
The per unit mutual fund NAV is calculated by adding the market value of all assets in its portolio and dividing the total by the number of shares in the fund. The NAV is calculated at the end of day after stock markets close.
The investor can buy or sell units of a mutual fund based on the mutual fund NAV.
For example the SBI Mutual Fund NAV for its Emerging Businesses Fund on 13 July 2010 was listed as Rs.16.87. This means that a unit in this fund can be bought for Rs.16.87 rupees.
Investors can check their mutual fund NAV in the fund website, through newspapers or through timely statements indicating the current mutual fund NAV and value of their shares.
Types of Mutual Funds
There are numerous types of mutual funds differentiated according to various criteria. The various types of funds can also be further qualified as open-ended and closed end funds. Open-ended funds can adjust the number of shares or units in them, closed end funds cannot. Closed end mutual funds have only a fixed amount of shares.
Every mutual fund type has a specific investment objective. The selection of stocks in the mutual fund stock portfolio is done according to the investment objective.
Some major types of mutual funds are: -
•Growth fund - Growth fund has capital appreciation as their mutual fund objective. It is more volatile than other types of mutual funds.
•Equity fund - This type of mutual fund focuses on dividends and regular growth. The emphasis on income makes it of lower risk than growth
•Sectoral fund - As the name implies, a sectoral fund concentrates on specific sectors such auto sector, power sector etc.
•Balanced funds - This type of fund caters to the need of investors for low risk, steady income and moderate capital appreciation.
The types of funds available are numerous. Other mutual fund types include bond funds, large-cap funds, index funds etc.
Some examples of mutual funds
Major mutual funds include Franklin Templeton funds in the US which offers more than 110 mutual funds (www.franklintempleton.com) , SBI Mutual Funds (www.sbimf.com) and Sundaram Paribas Mutual Funds (www.SundaramBNPParibas.in) in India.
For Stock Market & commodity Market Advise Or Tips Visit www.marketprophecy.in
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